2002 (12) TMI 434 - AT - Central Excise

Summary

Issues:
Imposition of penalty under Rule 173H for not removing goods within six months as provided, applicability of penalty under Rule 210, justification of penalty based on breach of rules, validity of Trade Notice prescribing a time limit of six months, and the power of Revenue officers to impose penalties.

Analysis:
The appeal challenged the imposition of a penalty of Rs. 1,000 confirmed by the Commissioner (Appeals) due to the appellants not removing certain goods for repairs/re-conditioning within the stipulated six-month period under Rule 173H. The grounds of appeal included the delay in rectifying defects due to damaged goods, financial constraints delaying disposal, and reliance on a case law stating no prescribed time limit under the Rule. The appellants argued against the penalty citing absence of penalty provision in Rule 173H(i)(d) and non-receipt of Trade Notice No. 25/93 prescribing the six-month limit.

During the hearing, the appellants did not appear, and an adjournment request was made. The ld. DR supported the lower authorities' findings, emphasizing the breach of Rule 173H and the penalty justification under Rule 210 for rule violations. The Commissioner (Appeals) upheld the penalty citing the breach of the time limit set by the Trade Notice. However, the Tribunal judge disagreed with the penalty imposition, referencing the Supreme Court's stance that penalties need not be imposed for technical breaches. The judge highlighted that penalties should aim for curative and demonstrative effects, not retribution, and should not be used as a punitive measure.

In the judge's analysis, it was noted that the goods were not held with an intent to evade duty, were not liable for confiscation, and the breach did not warrant penalty imposition. The judge referenced the case of M/s. Hindustan Steel to support the stance that penalties should not be imposed for minor breaches. Ultimately, the judge set aside the penalty and allowed the appeal, emphasizing that penalties should serve a corrective purpose and not be applied as punitive measures without justification.